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I have a rental house w/1st Horizon that dropped in value, the int rate is high, could I get HARP?

We bought the house in 2004 and since then the value has dropped around 40k.  Right now Zillow estimates that it is worth about what we owe on it.  The interest rate is in the 7s and I can't rent it for enought to cover the mortgage.  Can I get approved for HARP with a rental property or is there some other way I can reduce my mortgage?
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August 19 2010 - Thornton
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Wetdawgs you are not correct.

FannieMae https://www.efanniemae.com/sf/mha/mharefi/

Who can benefit from the Refi Plus Program? Borrowers trying to refinance out of an adjustable rate mortgage, or a borrower looking to lower their monthly payment. Another important benefit is for borrowers whose LTV may have risen to 125%. For instance, let's say your mortgage is $375,000, but your home is worth $300,000. You would be eligible to qualify for this loan because your LTV would be 125%.

What are some of the major highlights of this loan program?

  • Max 125% LTV and no max for CLTV
  • Properties eligible are Owner Occupied, 2nd Homes and Non-owner Occupied (Investor)
  • No mortgage insurance if existing loan does not have mortgage insurance,regardless of new LTV
  • 2nd home must be 1-unit
  • For investment property, no limit on the number of mortgages to the same owner.
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August 19 2010
Thanks Rudi!  I hope all is well in CA :)
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August 19 2010
I don't think the LLPA caps were a fluke.   In my opinion, the goal of HARP loans is for Fannie/Freddie to reduce the risk exposure of their portfolio by lessening the default risk.   I see it as "throwing a bone" to the struggling homeowner.

Re-writing high LTV loans and re-pooling into new MBS will delay defaults.   If LLPA caps were not there, volume/benefits would decrease and default pace would quicken.
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August 19 2010
As always Keane, excellent explanation. TU ..... Happy funding, Rudi
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August 19 2010
wetdawgs,

When you visit the Making Home Affordable website (www.makinghomeaffordable.gov), it does state this but this is NOT true.  Not only can you do a HARP loan on an investment property, they're PERFECT for investment properties.  Let me explain.

About 90 days after HARP loans offered, they made a change where there was a cap on the cost adjustments.  What this means is a homeowner would never have to pay more than about .50% more on their interest rate on a 30 year fixed than the best HARP rates available.  I'm guessing they implemented this because all of the cost adjustments for high loan-to-value and credit score were keeping homeowners from getting a competitive rate.  What they did NOT do is make the cap different for rental properties.  Guess how much higher the average landlord pays for a rental property?  .50%.  So not only is the rate almost the same as the best non-owner occupied rates, credit score, property type and loan-to-value no longer were added on, making this loan product perfect for rentals.  As long as you qualify, you get a great rate.

Here's my blog post specifically on this topic.  I'm pretty sure it was a fluke and the cap wasn't designed for rental properties but they were grandfathered in.  I wouldn't be surprised if they changed it, so I would definitely take advantage of this while it's available. 
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August 19 2010
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HARP is for primary residences, not for investment properties.

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August 19 2010
The only way to find out if you qualify for a Home Affordable type loan is to go to the links I have provided below.  If your loan is owned by FannieMae or Freddie Mac, you will have options available.

FannieMae loan lookup tool
http://www.fanniemae.com/loanlookup/ 

Freddie Mac loan lookup tool
https://ww3.freddiemac.com/corporate/

Let me know if I can be of further assistance.

Best of luck
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August 19 2010
 
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